Menu

Zaidwood Capital

What is the Difference between Equipment Financing and an Equipment Lease?

Written by

in

The primary difference between equipment financing and an equipment lease lies in ownership, structural mechanics, and tax treatment. Equipment financing is a loan secured by the equipment, which results in the borrower owning the asset outright after the final payment is made. In contrast, an equipment lease grants the business usage rights for a fixed term; the lessor retains ownership throughout, and at the end of the term, the business must either return the equipment or exercise a buyout option to acquire it.

Additional distinctions include:

Cost Calculation: Equipment financing typically uses an interest rate (APR) to determine costs, whereas leasing utilizes a lease factor.

Term Comparison: Financing terms generally range from two to seven years, while leases typically last between one and five years.

Accounting Treatment: Financed purchases are often classified as a capital lease, appearing as both an asset and a liability on the balance sheet, whereas operating leases have their own recognition requirements under current standards like ASC 842.

Tax Benefits: Financing may allow for depreciation deductions, including Section 179 and bonus depreciation, as well as interest deductions. With leasing, the lease payments themselves are generally deductible as a business expense.

Related FAQs

More posts

Book A Call
Securities are offered through Finalis Securities LLC, Member FINRA / SIPC. Zaidwood Capital LLC (dba Zaidwood Capital / Zaidwood) (“Zaidwood Capital”) is not a registered broker-dealer, and Finalis Securities LLC and Zaidwood Capital are separate, unaffiliated entities. Finalis Securities LLC, Office of Supervisory Jurisdiction is located at 450 Lexington Ave, New York, NY 10017, 800-962-0418.
Finalis Privacy Policy | Finalis Business Continuity Plan | FINRA BrokerCheck | Finalis Form Customer Relationship Summary (“Form CRS”)
‍https://www.zaidwoodcapital.com (the “Zaidwood Capital Website”) is a website operated by Zaidwood Capital. This website is for informational purposes only, is not an offer, solicitation, recommendation, or commitment for any transaction or to buy or sell any security or other financial product, and is not intended as investment advice or as a confirmation of any transaction. Products and services on this website may not be available for residents of certain jurisdictions. Please consult with a Finalis Securities’ registered representative regarding the product or service in question for further information. Investments involve risk and are not guaranteed to appreciate. Any market price, indicative value, estimate, view, opinion, data, or other information herein is not warranted as to completeness or accuracy, is subject to change without notice, and Zaidwood Capital along with Finalis Securities LLC accepts no liability for its use or to update it or keep it current.
Investing in private placements involves a high degree of risk. These investments may be illiquid, speculative, and subject to substantial restrictions on transferability. Investors may lose all or part of their investment and should only invest capital they can afford to lose. Prospective investors should conduct their own due diligence and consult with their legal, tax, and financial advisors prior to making any investment decision. For your reference, Finalis’ Form CRS describes the services that we provide, how we are compensated, and other important information about Finalis Securities LLC.
Disclaimer: Corporate logos do not represent endorsements.
‍
Copyright © 2026 Zaidwood Capital. All Rights Reserved.